• The Board of Directors of State Bank of Mysore approved the financial results for the year ended 31st March, 2005 at its meeting held in Mumbai on 10th May, 2005. The ‘Net profit’ of the Bank registered a growth of Rs.29.88 crores (16.94%) and reached a level of Rs.206.26 crores from Rs.176.38 crores in March, 2004. The Net Profit was achieved after providing for Rs.127.21 crores towards depreciation on Govt. securities, which were transferred from AFS to HTM Category during the year in accordance with RBI guidelines. The ‘Operating Profit’ also registered a growth of Rs.26.74 crores (6.29%) from a level of Rs.424.92 crores in the previous year to Rs.451.66 crores in March, 2005, after providing for Rs.58.71 crores for payment of arrears of wages to employees on account of wage revision for the period 01.11.02 to 31.03.05. The Board has proposed a dividend of 75% for the year 2004-05.
  
  
• KEY FINANCIALS: The Net worth of the Bank has grown to Rs.750.79 crores from Rs.576.90 crores representing a healthy growth of 30.14%. The Bank’s Capital Adequacy Ratio (CAR) stood at 12.08%. Tier-II Capital has been augmented by issue of Fixed interest rate unsecured Non convertible redeemable bonds of Rs.175 crores, during January 2005. ICRA has upgraded the rating of the Bank’s existing bonds from AA- to AAA, and has also accorded AAA rating for the above mentioned Bond issue of Rs.175 crores. Earnings Per Share (EPS) has gone up to Rs.572.94 from Rs.489.96 in March, 2004. Average Business Per employee has risen from Rs.162.81 lacs in March, 2004 to Rs.203.54 lacs in March, 2005. Net profit per employee has also increased from Rs.1.82 lacs to Rs.2.16 lacs. Despite a large increase in assets, ROA has been maintained at a healthy 1.25% Similarly, ROE also continued to be at a healthy 27.27% .
  
  
• OPERATING INCOME: During the year the Net Interest Income of the Bank has increased from Rs.454.40 crores in 2003-04 to Rs.544.75 crores, thus registering a growth of 19.88%. Non-interest income improved from a level of Rs.340.42 crores to Rs.386.01 crores registering a growth of Rs.45.59 crores (13.39%) during the year with sizable contributions from Government Business operations and Recovery from stressed assets. As a result, the ratio of Non interest income to total income has improved from 24.36% to 24.84% as at the end of March, 2005. Consequently, the Operating Income of the Bank registered a growth of Rs.135.92 crores (17.10%) from Rs.794.83 crores as on 31.03.04 to Rs. 930.75 crores as on 31.03.05.

• OPERATING EXPENSES: Operating Expenses increased from Rs.369.90 crores to Rs.479.10 crores as at the end of March, 2005 registering a growth of Rs.109.20 crores (29.52%). The increase in operating expenses was due to the provision of Rs.58.71 crores for payment of arrears of wages to employees on account of proposed wage settlement for the period 01.11.2002 to 31.03.2005. Excluding this provision, the Bank has been able to restrict the increase in Operating expenses to Rs.50.49 crores (13.65%).
  
  
• BUSINESS GROWTH:

  Deposits: The level of aggregate deposits increased from Rs.10,860.47 crores in March, 2004 to Rs.13,342.98 crores thus registering a growth of 22.86% (Rs.2,482.51 crores). This growth compares favourably with growth rate registered by aggregate deposits of All Schedule Commercial Banks (ASCB), which is at 15.24%. Market share in Aggregate deposits increased from 0.71% in March, 2004 to 0.76% in March, 2005. The cost of deposits declined from 5.71% in the previous year to 4.96% by March, 2005.
  

• Advances: The advances of the Bank increased from Rs.6,632.23 crores to Rs.9124.50 crores in March, 2005, registering a growth of Rs.2,492.27 crores (37.58%) during the year and exceeding the growth rate registered by Total Advances of ASCB, which is at 33.26%. Market share in Total Advances increased from 0.77% in March, 2004 to 0.80% in March, 2005. The Credit Deposit ratio increased from 61.07% in March, 2004 to 68.38% in March, 2005.

• Retail Segment Advances: Greater thrust was laid on enhancing deployment in the retail segment during the year. Impressive performance was achieved in Housing Loans which stood at Rs.870.52 crores (growth of 71.41%) and Education Loans, which stood at Rs.78.87 crores (growth of 57.80%). The Bank’s advances to Small Scale Industries sector has increased from Rs.547.16 crores to Rs.644.59 crores (growth of 17.81%) and to Small Business Finance from Rs.334.57 crores to Rs.374.45 crores (growth of 11.92%) as at the end of March, 05.
  

• Agriculture Finance: Agricultural advances continued to receive high priority and have recorded a growth of 41.72% (Rs.361.43 crores) to reach a level of Rs.1,227.80 crores. In Karnataka, Bank’s advances to agriculture sector stood at Rs.1,122.77 crores and constituted 22.33% of the total advances of the bank in the State. Under the Special Agricultural Credit Plan (SACP) (Doubling of agricultural credit in 3 years as per Government of India guidelines) the Bank disbursed Rs.806.08 crores during 2004-05 as against Rs.519 crores disbursed in the previous year, achieving a growth of 55.30% against the stipulated 30% growth in the SACP.
  
  

• SHGs: The Bank is actively participating in increasing credit linkage to Self Help Groups in Karnataka state and has covered 3051 groups with a credit assistance of Rs.19.44 crores during the year, with a cumulative coverage of 6,155 groups and credit assistance of Rs.45.44 crores. The Bank has been awarded the first prize for SHG-Bank linkage by NABARD for the year 2002-03.
  
  
• Priority Sector Advances: Priority sector Advances grew by Rs. 1,020.02 crores and reached a level of Rs.3,323.47 crores, amounting to 40.34% of Net Bank Credit against the benchmark of 40%.
  
  
• Investments: The investments of the Bank in Government approved and other securities increased from Rs.5,490.70 crores as at the end of March, 2004 to Rs.5,800.87 crores as at the end of March, 2005, recording a small growth of Rs.310.17 crores (5.65%). Infact, net of investments in Treasury Bills, there has been a decline in the level of investments vis-à-vis March 2004.
  
  
• Foreign Exchange Business: The Foreign Exchange Turnover of the Bank crossed the Rs.10,000/- crore mark, reaching a level of Rs.10,111.64 crores during the year, thus recording an increase of Rs.1,186.77 crores (13.30%) over the last year. Export credit stood at Rs.753.00 crores as against Rs.494.38 crores of the previous year, constituting 9.14% of Net Bank credit.
  
  
• NPA Management: By efficient management of stressed Assets, the Bank has been able to bring down its Gross NPA level from Rs.514.53 crores (7.76%) in March, 2004 to Rs.415.37 crores (4.56%). The Provision Coverage Ratio has substantially increased from 63.26% in March, 2004 to 79.56% in March, 2005. As a consequence of this, the net NPA level has declined from Rs.186.38 crores as of March, 2004 to Rs.80.99 crores. The net NPA Ratio has declined from 2.96% to 0.92%. The Bank plans to reduce its net NPA ratio to less than 0.50% by the end of March, 2006.
  
  

• Technology Initiatives: During the year, additional 103 ATMs have been added taking the total number to 203. The ATM’s are networked with the 5000+ ATMs of the State Bank group, enabling ATM card holders access across the length and breadth of the country. As a part of the State Bank Group’s ambitious technology plan, 17 branches of the bank have already migrated to Core Banking platform and the Bank plans to migrate all its branches before March, 2006. Bank has also implemented Enquiry based Internet Banking facility at 239 branches, covering 88% of the metro and urban branches.
  
  
• Business Process Reengineering: (BPR) In order to bring about tangible improvement in performance by redesigning business process, Bank has rolled out some initiatives under BPR. One of the initiatives ‘Grahak Mitra’ has been rolled out in 15 branches in Bangalore City. The Bank plans to cover other branches and centers shortly. Bank has also installed Cheque Drop Boxes in 105 branches of the Bank. Bank has established a Retail Asset Central Processing Centre (RACPC) at Bangalore for personal segment advances and plans to roll out one Small Enterprises Processing Centre (SEPC) at Bangalore and a combined unit of RACPC & SEPC at Mysore shortly. Bank also proposes to roll out other initiatives like Centralised Currency Administration Cells, Relationship Managers for Personal Banking and Medium Enterprises etc;
  
  
• Regional Rural Banks: The two Regional Rural Banks (RRBs) sponsored by the Bank, viz; Cauvery Grameena Bank and Kalpatharu Grameena Bank, have combined net work of 204 branches. The combined deposits and advances of these two RRBs, as on 31.03.2005, stood at Rs.652.46 crores and Rs.463.00 Crores respectively and profits as on 31.03.2005 stood at Rs.7.30 crores. The two RRBs combined together have computerized 100 branches.
  
  
• Branch Expansion: The Bank has opened twelve (12) new branches during the year 2004-05. With this, the Bank’s network of branches stands at 633 spread over 14 states. As at the end of March, 2005, the branch network comprises 148 Metro, 122 Urban, 150 semi-urban and 213 rural branches.
  
  
• Future Plans: The Bank has plans of increasing the operating profit and net profit, substantially, during the current year also. With this aim in mind, the Bank has set for itself an aggregate business growth target of Rs.5,200 crores. Technology would be a major focus area, which envisages bringing the whole bank under Core Bank solutions and extending e_banking to all its clientele. The Bank would continue its policy of credit and risk dispersal and greater thrust would be given to financing agriculture, Small and Medium enterprises, Retail trade and Personal segments.

  Training and upgradation of skills to meet the challenges of the technology era in Banking would be the Bank’s constant endeavour, while remaining customer centric.

  BANGALORE 11th May 2005		Y.VIJAYANAND MANAGING DIRECTOR

State Bank of Mysore
H .O.: K.G.Road, Bangalore - 560009, INDIA
Phone: 91 80 22353901 to 22353909 ; 22353473.
Fax: 91 80 22384480